I would like to begin by saying thank you to the many people who have written in via email, through our DMs, or on social media expressing their support, understanding, and compassion as KnitCrate navigates this situation. Whenever we receive one of those messages, we share it internally with the rest of the team, and it helps boost morale and remind us why we enjoy being a part of this community. So again, THANK YOU.
The situation over the past year has been, well…to say it has been messy would be an understatement. The lack of inventory being in stock (particularly in the last 3 months), delayed shipments, and customers understandably being more budget-conscious with the uncertainties of the pandemic have all strongly impacted our sales as a company. We have been doing whatever we can to overcome it. One of the biggest challenges we’ve dealt with as a company during COVID-19 has been our supply chain, both with getting the yarn to our warehouse for kit assembly and for production of the yarn in the first place.
Issue 1: Logistics of receiving the yarn
There are two main problems affecting companies who rely on importing/exporting goods these days.
The first is that, due to COVID, there are less commercial flights. Almost all commercial flights carry the passengers up top and cargo down below. With less commercial flights, there is less opportunity to transport cargo. This causes a backlog of cargo sitting at the airports. For example, we paid our mill in mid-March to try to get what should have been the April yarn now in March (paying it a month ahead of what was planned in our budget), at which point they sent the cargo to the airport in Lima. The cargo sat there for over a week because of the backlog of other cargo waiting to be put on a plane. The airline finally delivered 3 pallets to the US on March 30th. The remaining 9 pallets arrived today on March 31st. Customs wouldn’t let us pick up the first 3 pallets until the other 9 arrived, because they wanted us to pick up the order in its entirety. We finally got clearance to pick it up earlier today.
The second issue companies are facing are capacity constraints at the ports, whether airports or ocean. All ports worldwide are working with far less employees than they were before the pandemic, which causes massive delays in being able to process shipments. This affects us with our large inbound orders but also with shipments to our international customers, as packages sometimes sit at customs in your countries for what may seem to be an eternity.
Issue 2: Production of yarn at the mills
Because of the volume of yarn we are now ordering monthly, we have to contract with our mills 12+ months in advance. For example, as of today, all yarn orders through March 2022 are already contracted. Why the long 12-month lead time? The mills need this amount of lead time to plan their own raw materials purchases and production schedules, not just for our orders, but the orders of all their clients. Every month, we pay our mill at the time of shipment, they proceed to ship the yarn to us. Under normal circumstances, it takes a shipment by air only 1-3 business days to arrive, clear customs, and be delivered to our warehouse. Outside of a worldwide pandemic, this is not usually an issue. The mills have plenty of time to produce yarn and deliver it the first week of each month when we need to assemble your kits and ship to you.
However, the COVID pandemic has complicated things. Both of our main mills in Peru and Italy have had periods of time where they outright closed due to government restrictions on non-essential businesses to help combat the spread of COVID in their respective countries. For example, in April/May of 2020, our Peruvian mill was closed for two months and that left us without yarn to send out in May. Due to the lead times required and the fact that most mills worldwide were (and still are) facing similar issues, looking for alternate yarn was nearly impossible. Thankfully, our team was quick on their feet and we put together a fun dye-it-yourself project using undyed yarn from our Dyer Supplier business.
During this first quarter of 2021, our Italian mill, who was originally supplying yarn from December through February, has been facing stringent lockdowns and closures in response to the recent increase in COVID cases in Italy. This disrupted their ability to produce yarn and has resulted in part of the January yarn and all of the planned February yarn not being delivered. We were horribly disappointed about this, but despite our best efforts as well as the mill’s, the production needs could not be met. Thankfully, our Peruvian mill has been able to come back online with a more regular schedule in the past few months, and we have been working with them to get yarn delivered now that was originally meant for a later month.
While this is a solution to the inventory needed for crate shipment, it presented the company with a new problem. We had to fund the purchase for this yarn outside of our budget and available funding, which has been difficult during a challenging and financially straining year. This is why we have been forced to issue a credit, as opposed to an outright refund, on those purchases. It would be impossible for the company to do both - issue a refund for all those orders at one time while allocating funds to pay for yarn ahead of time.
Does this situation absolutely suck? Yes. It absolutely sucks. Am I sorry that this is happening? Of course. Business owners who give a damn about their business, customers, and employees do not set out on a mission to disappoint customers or give a less-than-exceptional experience. It is more heartbreaking to me than I can explain. But we aren’t dealing with normal times. We are doing what we need to do to get the company through this temporary situation to keep delivering yarn each month, keep our team members employed, and continue to be the business so many of you have grown to love.
Unfortunately, this also means streamlining how we offer products to you as well as increasing prices. When we took over KnitCrate in mid-2016, the kits ranged in price between $45 to $65 USD. We lowered those prices significantly to $24.99, including shipping & handling, that same year. We have kept prices there since then, even though shipping costs and wool prices have skyrocketed over the past 4-5 year period. Keeping our prices that low could not continue indefinitely. We had plans to introduce these price increases later in the year, but this situation has forced us to accelerate those changes. However, even at the new prices, we still feel there is superb value for the yarn you are receiving. Moreover, you still have access to the member discounts in the shop which gives you even more value.
I am hoping that most customers know us well enough to understand that we aren’t trying to pull a fast one or go Dr. Jekyll/Mr. Hyde on you. We would never turn into a completely different company who is out to take advantage of you. However, we recognize that these sudden changes and issues have understandably raised concerns. Among them, there have been concerns raised about the products and website that we would like to clarify:
- We will continue to include 2 skeins per crate for the traditional membership and 1 for the sock membership. The “1+ skeins” wording previously seen on the website was updated back in 2019 when we tested featuring 1 skein of ultra-luxury base in the months we featured Citrus Squeeze and Titmouse. We subsequently sent a survey to our customers asking how they would like us to approach this in the future. The answer was that the majority preferred two skeins, and so we have featured at least two skeins ever since and will continue to do so.
- We had seen some comments regarding extras no longer being included in kits. Please rest assured that extras will continue being a part of your kits.
- Member Central discounts, Double Down discounts, etc. will continue. These are some of the key benefits of being a member and will continue to be so.
I have come across some hard-to-read comments about how KnitCrate is going out of business or won’t be around in 2 months. Are we going through a tough situation? Yes. That is no secret. Are we disappearing in 2 months? No. Like I said above, the yarn is contracted out through March 2022 with our Peruvian mill. This mill has already come back online and is working with us to push every month contract up by 30 days. We are working overtime and making the necessary changes to get things back on track and get the shipping schedule normalized again.
Ultimately, whether KnitCrate, or any company for that matter, stays in business or not is always in the hands of the customers. Companies can die for many reasons, but there are two overarching reasons.
- The company cannot deliver a product the customer wants. The company created a product the customer wants and is willing to pay for, but the company cannot access or deliver it to the customer.
- The company cannot get customers. The company developed a product a customer doesn’t care for and isn’t willing to pay for and they go out of business.
As a company, we have predominantly been battling Reason #1 during the pandemic and are actively working on solutions within our team and with our partner mills to address the supply chain issues. Given that our Peruvian mill was able to finish the April yarn by mid-March and ship to us early, we are looking forward to working with them on the future orders already contracted as we bump up each of those months. Going forward, we will not be pre-selling yarn on the shop. Yarn will only be listed for sale once it has been received into our warehouse, quality controlled, and counted. We understand that this may upset some customers who liked the ability to reserve the yarn by pre-buying it, but it is a necessary action.
That leaves us with Reason #2, and this is entirely in your hands as a customer. We offer great products, great value, and fair prices not available in most places. In fact, I encourage anyone who has been a member with us for a long time to look at the yarn they have purchased through us over their lifetime as a customer, either through the kits or in Member Central, and tally up the savings they have earned. I don’t know many other places that can enable you to save on quality yarn as much as KnitCrate.
When it comes to business, the customer is always in charge. You vote with your dollars whether any company you buy from, including KnitCrate, stays in business or not. This is not new, though. This has always been the case, ever since we took over the company in 2016, and will always be the case. We have had to make some tough decisions during a temporarily very sh!tty situation. We made those decisions in order to stay alive and keep delivering yarn to you at affordable prices long into the future. If you will have us, we will be here working to bring you yarn with great projects at great prices.
Thank you for your support. We hope you stay well and keep stitchin’!
- Rob and the KnitCrate Team